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Published byKathleen O’Neal’ Modified over 9 years ago
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$280 $287 $319 $397 $494 $657 $766 $687 $705 $724 $744 0 100 200 300 400 500 600 700 800 900 Out-of- pocket spending per person Historical Trends in Cost-Sharing 19601965197019751980198519901995200020012002 0 10 20 30 40 50 60 Percentage of total spending Out-of-pocket spending as a percentage of all personal health care spending Source: Centers for Medicare & Medicaid Services, 2004. 1
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What Explains the Increase in Total Medical Spending over the Last Fifty Years? Technology Prices Insurance Income Aging
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Features of risks that should be insured Unlikely Expensive Uncertain Use is not sensitive to insurance (inelastic demand) 3
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Why do we have health insurance? Insurance against financial loss Transfer money to people who are sick Tool for population health?
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So how does cost-sharing line up with our insurance goals? Example 1: Traditional oral agents like anti-hypertensive drugs – Not rare – Not expensive – Not uncertain – Not a good candidate for insurance – Now covered generously Example 2: Specialty drugs like Avastin for metastatic cancer – Rare – Expensive – Uncertain – Trend is to require extreme cost-sharing to pass risk back onto patients 5
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